Day of Malaise

Following an 820-point rally for the Dow during February, stocks are showing signs of exhaustion and malaise today.

Textbook Bubbble

The S&P 500 closes near new all-time record high.

Stocks Rise, Shrug Off Global Weakness

Stocks are once again approaching all-time record highs, oblivious to the growing weakness and risk.

“The collapse is fundamentally due to the unstable position; the instantaneous cause of the crash is secondary.” Didier Sornette

Why Stocks Went Up, and Are Now Back Down Again Today!

This morning, the economic news was dreadful enough that stocks ROSE sharply. I know that makes no sense, but Wall St is a true believer at the altar of central bankers.
So why would Wall St BUY on bad news? Because they have become so addicted to endless monetary stimulus that they see all economic bad news as a good reason to buy stocks.

Unfortunately, however, one of the Fed governors this morning threw cold water on Wall St's expectations of an UN-taper. John Williams, who is one of the Fed's biggest fan of money printing, said that even a poor jobs report like the recent one won't stop the Fed from tapering off it's debt monetization scheme. Ironically, he predicted STRONG economic growth this year.

Stocks FELL on the news, dropping into negative territory. What a warped market that BUYS on bad news, and then SELLS on a bullish forecast!

headline:
WILLIAMS SAYS ‘RECENT DATA HAS BEEN SOMEWHAT DISAPPOINTING’

but...
FED’S WILLIAMS: ‘HURDLE IS PRETTY HIGH’ FOR CHANGING TAPER PACE
FED’S WILLIAMS SAYS NOW IS TIME TO FOR PULLING BACK QE

The red line (top left) was yesterday's close. Stocks rose sharply for the hour following the weak real estate data, then plunged when Williams began his speech.

What a twisted market that does just the OPPOSITE of what would be expected. Bad news brings a RISE, while good prospects sends stocks into "sell" mode.

But this is the culture in the financial markets that central bankers have created!

Twin Headlines of Housing Disaster

These two headlines were released this morning. Both suggest an over-priced housing market. Again!

These two headlines, combined with yesterday's, make a trend.

Home Builder Confidence Crashes

Felix Zulauf Sees "Systemic Risks", "Deflationary Episode"

His summary:
"In general, we expect another deflationary episode leading to systemic risks and economic disappointments. Hence, it is time to structure portfolios much more conservatively and put capital preservation ahead of aggressive return strategies."

"It is unbelievable how bullish [investors] have become..."
"It may take a few more months until the dimension of risk in the credit system become more visible, but I expect this to be on the table in the second half /of 2014/ at the latest, when the price of gold should be higher again."

Here is the full article.